Do you want more bidders?
The primary role of an auction house is to act as an agent, effectively operating a market to match buyers and sellers for the benefit of the consignor. Given that role, it is crucial to attract likely buyers to each auction and, over time, develop a reputation of fairness, accuracy, and consignment authenticity.
For high value consignments (say over $250,000) an auction house's principal activity before sale day is getting bidders.
For high value lots, our auction house friends have told us that the house will consider it a success to get 4-6 bidders to an auction.
This is a very high-touch business, where established personal relationships are extremely valuable. The auction house with the best rolodex for a specific consignment will likely get the best hammer price.
What if there is an additional way to raise a paddle in the auction room?
What if smaller value bidders could get together and bid as a cohort in the auction, competing with full bidders?
The aShareX system can assemble up to 5000 bidders, real-time, in a live auction, to bid for high value consignments, overcoming regulatory hurdles, performance challenges, and financial collection issues.
1. Regulatory Hurdles
Fully complying with SEC regulations, fractional ownership following a win at auction creates a security in line with the Howey test. aShareX creates a Reg A, Tier 2 offering before the auction. Fractional bidders must pass KYC/AML (Know Your Customer/Anti Money Laundering) checks and have an opportunity to review the offering circular prior to bidding. aShareX has simplified and automated this process to make it as simple as possible for users to bid.
2. Performance Challenges
The aShareX bidding system is designed to manage up to 5000 concurrent bidders, all placing bids at a price level that may only be open for a few of seconds, this is accomplished by allowing bidding in 3 modes:
a. Pre-bidding, which is open for several days before the auction. Users tell us how much they are looking to bid, and up to what price level, and the system auto places their bid in all rounds up to their limit. For example, a user may want to bid $5000 until the price of the lot reaches $750,000. Their $5000 fractional bid will be placed in every round up to $750,000 and will not be placed in the round immediately following.
b. Once the auction starts, fractional users can place a bid in the current open round. When enough fractional bids are received by the system for that round, aShareX raises the paddle for the auctioneers’ attention.
c. As with pre-bidding, the user can place a bid with their fraction amount, and their maximum price level, and this bid will be entered into every round up to their limit, again when enough fractional bids are received by the system for that round, aShareX raises the paddle for the auctioneers’ attention.
3. Financial Collection Challenges
The aShareX system is designed to minimize collection issues by setting bidding limits based on a users’ ability to pay. This is done as part of the sign-up process using the information supplied for KYC checks, and, for large spending limits, some additional validation.
Post auction, when fractional bidders win, payment processes are secure, efficient and easy to use, and the monies collected in an ESCROW account supervised by the registered Broker Dealer of the security. Should there be a delay or non-payment, aShareX has a series of automated processes and procedures to resolve any issues.
How is aShareX getting bidders?
Having solved the principal problems with fractional bidding, the next challenge is summed up by the obvious question: Where do these extra bidders come from?
In practice, fractional bidders come from 3 major sources, with aShareX niche marketing to each group to maximize interest in fractional ownership:
1. Investors interested in diversifying their more traditional portfolios. Alternative investments, or “Alts” as they are known, are a growing area of financial services covering art, collectibles, vintage cars, real estate, and fancy diamonds to name but a few, where assets can act as a hedge against traditional stocks and bonds.
2. Specialist Collectors. Psychologists tell us that collectors would prefer to own a portion of the best rather than the whole of a lower order collectible. For the higher-grade consignments with fan and collector interest, we market to fan groups specific to the asset.
3. Your auction house customers who cannot or do not want to bid for the whole amount. When auction houses sell a high value lot, they inherently exclude the vast majority of their normal client base from bidding. aShareX’s fractional bidding capability allows those customers to be involved in the auction, perhaps joining a sale they would not normally attend, and bidding on other interesting lots.
Conclusion
With all of the major issues of fractional bidding and ownership resolved, aShareX helps auction houses broaden their bidder base, engage with their customers, encourage bidding competition, and reduce the risk of failing to sell.
So my question stands, do you want more bidders?...
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